Frequently Asked Questions

What is Special Situation?

Special Situation in investing refers to particular circumstances, corporate actions or specific events that tend to materially impact company’s value and share price. Generally it is a short term oriented investment that has a clear catalyst for share price appreciation and is less driven by company or market fundamentals. Special Situation examples include Merger and Acquisition (M&A) Arbitrage, Spin-offs, Restructurings, Bankruptcies, Liquidation, Tender Offers, Rights Offerings and etc.

What are Odd Lots? What is Odd Lot Tender Offer?

Sometimes when the company launches a tender to buy back shares, there will be a special provision for shareholders that have less than 100 shares, the so called odd-lot holders. This provision ensures that odd-lot holders are not prorated if the tender offer is oversubscribed, meaning that all the tendered shares are accepted, whereas for other shareholders only a portion of the tendered shares will be accepted.

The risk arbitrage set up occurs whenever shares trade below the tender price. An investor can buy 99 shares or fewer, tender at the higher price, and capture the differential within a short period of time (as little as the length of a trade settlement if guaranteed delivery is allowed). The strategy is not riskless, as tender offers can fall through for various reasons, but it is the closest thing to a freebie there is on a stock market.

How often Dutch Tenders are priced at the upper limit?

It is case by case situation and there is no hard rule for it. Historical evidence suggest that majority of Dutch tenders during 2013-2015 were priced at the upper limit.

Which broker to use?

Interactive Brokers is probably the most cost efficient broker you will be able to find.

How to cancel the subscription?

You can either do it yourself by cancelling recurring payments in Paypal or drop us an e-mail and we will cancel it for you.

4 COMMENTS

I am very interested in joining / adding your services. Only one issue, I am not knowledgeable of the terminology on these trade styles and am not knowledge on how to do this. Do you have a way that I could setup my broker to follow your trades as you make them? I’m sure you do not have time for novices like me but I am a Marketing Director and I also do Investment Banking in Real Estate and am quite busy. But this style of investing seems very safe and very lucrative. If what I am asking is not available can you please provide any youtube links or books on Amazon I could purchase to learn about this type of investing?

I do not have an option to automatically follow my trades and that is not the intention of the site. I simply share the ideas that I find interesting and then subscribers (after doing their own due diligence) can either agree or disagree with my thesis.

Hi, I read through some of the examples you’ve provided on the website which i find interesting and would be interested in subscribing to your service. However, I realize that a number of odd lot situations are only applicable to Record Holders, in which case I probably would not be qualify as I am not based in the US. As a foreign investor (in Singapore), how do I get around this problem?

Hi Alex, thanks for your interest in the site. With regards to odd-lot for record holders only, I believe that so far I have seen only two such transaction (one being LIME, and the other I do not recall now). For all the rest beneficial holding is sufficient. Most (>99%) of US investors also have no way of becoming ‘record holders’ on their shareholdings either, so being resident of Singapore should be ok as well. Hope this answers your questions.

The site also covers many other types of special situation trades besides odd-lots.